South Valley North Dakota

Transcription

1 EC1660 December 2014 Projected 2015 Crop Budgets South Valley North Dakota Andrew Swenson, Farm Management Specialist Ron Haugen, Farm Management Specialist The 2015 crop budgets provide an estimate of revenues and costs for selected crops. Each set of budgets are developed for a multi-county region. There is considerable variation in soil type and productivity, weather conditions, as well as management and production practices within each region. Therefore, THESE BUDGETS ARE ONLY INTENDED TO BE USED AS A GUIDE. EVERY INDIVIDUAL IS HIGHLY ENCOURAGED TO DEVELOP HIS/HER OWN BUDGETS! The profitability budget accounts for full economic opportunity costs for land and machinery investment, regardless of farm operator equity position. The bottom line is the return to labor and management. This is the expected payment to the producer for the labor and managerial efforts required by the crop enterprise. Each individual must make the decision whether it is sufficient. The budget can be changed to conform to the more common definition of accounting profit (return to unpaid labor and management, and owner equity) by replacing the machinery investment and land charge cost items with your per acre interest and rental expense of machinery and land, and real estate tax if land is owned. The budget can be used for long run decisions if the revenues and costs are realistic for several years. (Crop prices, direct costs, and the land charge are best estimates for only the 2015 crop year, but crop yields are historic averages and machinery ownership costs are an average for the total length of ownership). If the budget shows a high return to labor and management, and is representative for several years, increased acreage and corresponding investment should be considered. However, if long-run returns to labor and management are unsatisfactory the best decision may be to exit the crop enterprise and employ the machinery and land investment, and labor and management, in a different enterprise or investment. For short-run planning decisions you can omit the indirect costs if the land and machinery required to produce the different enterprises are in place. Simply compare the crop enterprises by calculating return over direct costs. Labor requirements and risk should also be considered. Insurance is not available for some crops. North Dakota State University, Fargo, ND

2 The budget can be used to estimate cashflow by making a few modifications. Machinery depreciation should be omitted and the machinery investment number replaced with your per acre principal and interest payment on machinery debt. For owned land, the land charge should be replaced with your per acre real estate tax and principal and interest payment on land debt. The 2014 Farm Bill initiated the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) support programs, and elimanted the direct and countercyclical payment programs and the ACRE program. PLC and ARC payments have been omitted from the budgets because those payments, if any, are tied to historic farm program base acres, not to current crop selection or production. Primary Assumptions: Crops are planted on dryland recrop ground. Costs of moving crop to local market/storage are included. Market Price: Best estimates of NDSU extension economists. The greater of projected market price and marketing loan rate is used. Market Yields: Average yield for the 7 year period , after the low and high yield years are removed. Yields for safflower, yellow mustard, buckwheat, millet, rye and chickpeas are from NDSU extension agronomists and industry sources. Fertilizer: Cost of fertilizer applied, based on soil test, to meet yield goal of 130% of market yield. N fertilizer can be reduced if previous crop was soybean, dry bean, field peas or lentil. Soil test Nitrogen Phosphorus Potassium - recrop: - 32 lb - 10 ppm ppm Fertilizer prices: Nitrogen -.46/lb Phosphorus -.45/lb Potassium -.38/lb Seed Prices: Spring Wheat Barley Corn GM traits Soybean RR2 Dry Beans Oil Sunflower Conf. Sunflower Oats Winter Wheat Fuel prices: Diesel 2.65/gal Gas 2.60/gal 11.00/bu 9.00/bu 3.15/thou.kern.35/thou.kern..88/lb 1.50/thou.kern. 2.50/thou.kern. 6.00/bu 10.50/bu Lubrication charge: 15% of fuel cost Crop Insurance: Coverage levels are 70% on all insurable crops. Yield Protection or APH insurance estimates are used, except for Revenue Protection on all wheat, barley, corn, soybeans, corn, canola, sunflowers and dry beans. Miscellaneous: soil testing, machinery rent and custom work. Operating Interest: Direct costs charged 4.25% interest for 6 month period. Misc. Overhead: Machinery housing and insurance at.5% and.85%, respectively, of average machinery investment. Also, liability insurance and license fees of trucks. In addition, $3 per acre is assumed for general farm utilities, farm publications, meetings, dues, income tax preparation, legal fees, etc. Land charge = average cash rent. Machinery investment: 4.5% real interest rate, over the years of machine ownership, is charged on average machinery investment. The real, or inflation adjusted, rate is the commercial rate minus the inflation rate. Ave. mach. investment = (Purchase price + Disposal price)/2 Depreciation = (Purchase price - disposal price / years ownership) 2

3 Spring Wheat Malting Barley Per Acre Figures Per Acre Figures Market Yield Market Price * MARKET INCOME Seed Herbicides Fungicides 5.50* Insecticides 0.00** 0.00** -Fertilizer Crop Insurance Fuel & Lubrication Repairs Drying Miscellaneous Operating Interest SUM OF LISTED Misc. Overhead Machinery Depreciation Machinery Investment Land Charge SUM OF LISTED IN SUM OF ALL LISTED COSTS RETURN TO LABOR & MANAGEMENT (24.78) (9.30) LISTED COSTS PER BUDGET UNIT (bu) (bu) -Direct Costs Indirect Costs Total Costs Wheat notes: *Includes seed treatment ($1.50-$2.00) and early season foliar fungicide ($2-$4.50). Late season fungicides are often warranted in this region. For fusarium head blight (scab) control, prothioconazole or metconazole containing products (about $12) are highly recommended when a more susceptable cultivar is grown and/or when conditions are favorable for infection. **Cereal grain aphid insecticide would cost about $6. Barley notes: *Use $2.89 estimate for feed barley price. **Includes seed treatment ($1.50-$2.00) and early season foliar fungicide ($2-$4.50). Late season fungicides, prothioconazole or metconazole containing products, for fusarium head blight (scab) control are recommended when conditions are favorable for infection. 3

4 Corn Grain Soybeans Per Acre Figures Per Acre Figures Market Yield Market Price MARKET INCOME Seed * 69.25* -Herbicides Fungicides Insecticides ** -Fertilizer Crop Insurance Fuel & Lubrication Repairs Drying Miscellaneous Operating Interest SUM OF LISTED Misc. Overhead Machinery Depreciation Machinery Investment Land Charge SUM OF LISTED IN SUM OF ALL LISTED COSTS RETURN TO LABOR & MANAGEMENT (72.97) (8.15) LISTED COSTS PER BUDGET UNIT (bu) (bu) -Direct Costs Indirect Costs Total Costs Corn notes: *GM corn with herbicide resistance and corn borer and corn rootworm control. Cost includes insecticide seed treatment for wireworm, rootworm, white grub and suppression of cutworm. Soybean notes: *RR2 (glyphosate) resistant soybeans. The cost includes $8 for inoculant and fungicide treatment in addition to seed expense. **Soybean aphid and/or spider mite insecticide 4

5 Drybeans Oil Sunflower Per Acre Figures Per Acre Figures Market Yield Market Price MARKET INCOME Seed * -Herbicides Fungicides 20.00* 0.00** -Insecticides *** -Fertilizer Crop Insurance Fuel & Lubrication Repairs Drying Miscellaneous Operating Interest SUM OF LISTED Misc. Overhead Machinery Depreciation Machinery Investment Land Charge SUM OF LISTED IN SUM OF ALL LISTED COSTS RETURN TO LABOR & MANAGEMENT (54.94) LISTED COSTS PER BUDGET UNIT (lb) (lb) -Direct Costs Indirect Costs Total Costs Drybean notes: *Fungicide for white mold. A second treatment may be necessary. Fungicide for rust at $2-$4.50 plus application maybe necessary. Oil Sunflower notes: *Cost includes seed treatment for control of wireworm and flea beetle. **Fungicide for rust would cost $4 plus application. ***One spraying for head feeding insects (red seed weevil, lygus bug and banded moths). Custom application cost of $8 is under Miscellaneous. 5

6 Confectionery Sunflower Oats Per Acre Figures Per Acre Figures Market Yield Market Price MARKET INCOME Seed 50.00* Herbicides Fungicides 0.00** Insecticides 14.00*** Fertilizer Crop Insurance Fuel & Lubrication Repairs Drying Miscellaneous Operating Interest SUM OF LISTED Misc. Overhead Machinery Depreciation Machinery Investment Land Charge SUM OF LISTED IN SUM OF ALL LISTED COSTS RETURN TO LABOR & MANAGEMENT (24.98) (101.74) LISTED COSTS PER BUDGET UNIT (lb) (bu) -Direct Costs Indirect Costs Total Costs Confectionery Sunflower notes: *Cost includes seed treatment for control of wireworm and flea beetle. **Fungicide for rust would cost $4 plus application. ***Two sprayings for head feeding insects (red seed weevil, lygus bug and banded moths) at about $7 per application. Each custom application cost of $8 is under Miscellaneous. 6

7 Winter Wheat Per Acre Figures Market Yield 54* Market Price 5.71 MARKET INCOME Seed Herbicides Fungicides Insecticides Fertilizer Crop Insurance Fuel & Lubrication Repairs Drying Miscellaneous Operating Interest 3.81 ======== ============ SUM OF LISTED Misc. Overhead Machinery Depreciation Machinery Investment Land Charge ======== ============ SUM OF LISTED IN SUM OF ALL LISTED COSTS RETURN TO LABOR & MANAGEMENT (40.89) LISTED COSTS PER BUDGET UNIT (bu) -Direct Costs Indirect Costs Total Costs 6.47 Winter Wheat notes: *Yield is per harvested acre. There is some risk of acreage abandonment in spring. 7

8 2015 Machinery List Purch. Annual Years Trade Machine Price Use to trade in Deprec. Invest. Repairs Ac/hr FWA 140HP Tractor hr /hr 9.46 /hr /hr FWA 180HP Tractor hr /hr /hr /hr 4WD 340HP Tractor hr /hr /hr /hr SP Combine (base unit) hr /hr /hr /hr Tandem Truck (used) hr /hr 7.46 /hr 7.73 /hr Semi & Trailer (used) hr /hr 8.16 /hr 9.33 /hr Pick-up Truck hr /hr 2.68 /hr 3.50 /hr Swather 30 ft ac /ac 0.84 /ac 0.49 /ac 13.1 Sprayer 90 ft ac /ac 0.26 /ac 0.49 /ac 42.5 Chisel Plow 38 ft ac /ac 0.51 /ac 0.95 /ac 19.6 Field Cultivator 48 ft ac /ac 0.58 /ac 0.86 /ac 24.7 Tandem Disk 28 ft ac /ac 1.22 /ac 0.86 /ac 13.6 Heavy Harrow 70 ft ac /ac 0.55 /ac 0.34 /ac 39.7 Air Seeder 40 ft ac /ac 2.52 /ac 6.16 /ac 17.0 Planter ac /ac 2.65 /ac 5.02 /ac 15.6 Bean cutter ac /ac 0.95 /ac 0.71 /ac 6.5 Corn head 12R w/chopper ac /ac 3.10 /ac 2.44 /ac 7.5 Grain head w/pu ac /ac 0.47 /ac 0.24 /ac 10.2 Grain str. cut 30 ft ac /ac 0.69 /ac 0.40 /ac 10.2 Head w/sunf pans 30 ft ac /ac 1.27 /ac 0.48 /ac 10.2 Flex head 30 ft ac /ac 0.93 /ac 0.59 /ac 10.2 Head w/drybean pickups ac /ac 1.92 /ac 0.55 /ac 8.9 Grain Cart hr /hr 7.90 /hr 7.50 /hr Grain auger hr /hr 5.95 /hr 4.70 /hr The NDSU Extension Service does not endorse commercial products or companies even though reference may be made to tradenames, trademarks or service names. NDSU encourages you to use and share this content, but please do so under the conditions of our Creative Commons license. You may copy, distribute, transmit and adapt this work as long as you give full attribution, don t use the work for commercial purposes and share your resulting work similarly. For more information, visit For more information on this and other topics, see County commissions, North Dakota State University and U.S. Department of Agriculture cooperating. North Dakota State University does not discriminate on the basis of age, color, disability, gender expression/identity, genetic information, marital status, national origin, public assistance status, race, religion, sex, sexual orientation, or status as a U.S. veteran. Direct inquiries to the Vice President for Equity, Diversity and Global Outreach, 205 Old Main, (701) This publication will be made available in alternative formats for people with disabilities upon request, (701) ???-12-14